5% or 10% deposit

Hutch100uk

My parents are helping me out with a deposit. I had originally hoped to get a 95% mortgage as I didn't want to ask them for any more than 5%. At the time, I had late payments on my credit file (which have since been removed) so they agreed to give me the 10% (some of which I would pay back over time).

Now my file is good again, I wonder if I should go back to trying for a 95% mortgage.

I know the rates will be much higher, but am more concerned about options after the initial 2 year rate comes to an end. Is this something I should be really concerned about? I have read that I may struggle to get another good fixed rate.

[Deleted User]

I am coming to end of a 5% fixed and luckily (I Hope) the price increase of the house will push me into the 15% equity bracket when I come to hopefully remortgage. But I would say go for the 10% option as the interest rate difference can make a huge impact on monthly payments. Mine was 4.99%. Hoping to get under 3% with an 85% LTV mortgage.

audigex

If your parents are willing and able to offer you the extra 5%, take it. Even if you have to pay them the whole lot back, I can't see them charging you as high a rate as the bank, nor demanding the money back as fast.

If you're worried about options after the initial term, get a longer initial term - it will be slightly more expensive during that fixed term, but by the time you've paid the mortgage for 5 years you'll owe a lot less money so you'll get a better rate anyway.

The rate will go up, but it's unlikely to go up excessively - work out what your payment would be with a 2% rate increase and see if you can afford that. That's the highest you should probably expect it to go (although I'll point out here that I'm no expert, nor do I see the future)